The Exchanges

The most recognized stock exchange in the world is the New York Stock Exchange or the NYSE.   There  are,  however, many exchanges  throughout  the United  States that  all operate in a similar manner. Exchanges are dual auction markets. They provide a central marketplace where buyers and sellers come together in one centralized location to compete with one another. Buyers compete with other buyers to be the highest price anyone is willing to pay for the security, and sellers compete with other sellers to be the lowest price at which anyone is willing to sell a security. All transactions in an exchange- listed security that are executed on the exchange have to take place in front of the “specialist / DMM” for that security. The specialist / DMM is an exchange member who is the designated market maker in that security and is responsible for maintaining  a  fair  and  orderly  market  for  the  stock  in  which  they  specialize.  The Specialist / DMM stands at the trading “post” where all the buyers and sellers must go to conduct business in the security. This is responsible for the “crowd” that you see on the news and financial reports when they show the floor of the exchange. All securities that trade on an exchange are known as listed securities.

THE DMM ACTING AS A PRINCIPAL

Related Articles
  1. Insights

    What's an Exchange?

    An exchange is an organized marketplace where securities and other financial instruments are traded.
  2. Insights

    The NYSE and Nasdaq: How They Work

    Learn some of the important differences in the way these exchanges operate and the securities that trade on them.
  3. Investing

    Stock Exchanges Around The World

    We tell you about five of the most popular stock exchanges from around the globe.
  4. Investing

    Who Owns The Stock Exchanges?

    As M&A heats up among the exchanges, here's how the market currently looks.
  5. Investing

    The Ins And Outs of Seller-Financed Real Estate Deals

    There's more than one way to buy or sell a house. Seller financing presents yet another unique option.
  6. Investing

    Ins And Outs Of Seller-Financed Real Estate Deals

    Seller financing works like this: Instead of a buyer receiving a loan from a bank, the person selling the house lends the buyer the money for the purchase.
  7. Tech

    5 Live Bitcoin Exchanges

    Learn about five of the largest bitcoin exchanges operating around the world in 2015, and discover the issues these exchanges are facing.
  8. Investing

    The Auction Method: How NYSE Stock Prices are Set

    The New York Stock Exchange (NYSE), sometimes referred to as “the big board,” is the oldest and largest stock exchange in the United States. NYSE is the place investors think of when ...
  9. Insights

    The Birth of Stock Exchanges

    Learn how British coffeehouses helped give rise to the juggernaut that is the NYSE.
  10. Investing

    Explaining Fixed Exchange Rates

    A government using a fixed exchange rate has linked the value of its currency to the value of another country’s currency, or the price of gold.
Frequently Asked Questions
  1. Do interest rates increase during a recession?

    Learn why interest rates do not rise in a recession; in fact, the opposite happens. Identify the factors that reduce interest ...
  2. What is the difference between deflation and disinflation?

    Learn what deflation and disinflation are, how supply and demand affect price levels, and the difference between deflation ...
  3. What rights do all common shareholders have?

    Learn what rights all common shareholders have, and understand the remedies that can be taken if those rights are violated ...
  4. What does CHIPS UID mean?

    Learn what CHIPS UID stands for and how it facilitates the transfer of funds as the back-end of the ACH network for both ...
Trading Center